A malpractice case can proceed against a New Jersey judge over his work for corporate clients before he took the bench.
The Appellate Division reinstated the suit, Jiorle v. Maenza, on Monday, finding it was improperly dismissed simply because Maenza was not named in an earlier action by the same plaintiff against those clients.
The alleged malpractice dates back to 2002, when Maenza, now a Morris County Superior Court judge, had a solo practice in Parsippany.
Maenza formed a corporation for Edward and Carolyn Mupo for the purpose of buying an abandoned warehouse in New Brunswick, and he maintained the corporate records. There were tax arrears on the property and the Mupos had agreed with the city that it would forbear foreclosing if they remediated and developed the property.
An investor, Mark Jiorle, was allegedly brought in because money was needed for cleanup and other expenses. He paid $350,000 for a half interest.
Maenza allegedly deposited the money into his attorney trust account and disbursed $325,000 of it to Mupo family members, as the Mupos directed.
Jiorle claims Maenza never questioned the disbursements, recorded their purpose or told him about them. Maenza also never provided him with stock certificates, despite repeated requests, and the agreement drawn up to reflect Jiorle’s ownership did not accurately reflect the investment terms, he says.
Further, Jiorle alleges, the agreement was drafted after the foreclosure was reactivated because the necessary planning board and other applications had not been filed. Neither the Mupos nor Maenza told him, and if he had known, he could have obtained the money needed to stave off the 2003 foreclosure, which he only learned of in 2004, he claims.
Jiorle says he believed it was not too late to fix things because the forbearance agreement required notice of default and none had been issued to his knowledge.
In fact, the city had provided notice in February 2003, as Maenza knew, but on Aug. 6, 2004, he sent a letter denying notice was sent, Jiorle alleges.
Based on the letter, Jiorle allegedly incurred $50,000 in legal fees on a motion to vacate the foreclosure only to have the city produce the notice of default and postal receipts.
Jiorle sued the Mupos in Middlesex County Superior Court and in 2006, won a jury verdict for fraud and breach of fiduciary duty. The $958,004 judgment consisted of $325,000 in compensatory damages, $400,000 in punitive damages, $194,094 in legal fees and expenses under the offer of judgment rule, plus prejudgment interest and taxable costs totaling $38,910.
The verdict was upheld in 2009 except for the amount of the punitive damages, and was remanded for a decision on that issue. It was never retried, however, because the Mupos could not even pay the compensatory damages.
While the appeal was pending, Jiorle sued Maenza in Middlesex County in September 2008. Superior Court Judge Richard Plechner dismissed the suit under the entire controversy doctrine, stating Maenza could have been joined with the Mupos but was not.
In 2010, Maenza was appointed to the Superior Court.
In reversing Plechner, Appellate Division Judges Carmen Messano and Jack Sabatino said the doctrine requires only that “all aspects of the controversy between those who are parties to the litigation be included in a single action.”
Rule 4:5-1(b)(2) requires plaintiffs to file a certification identifying nonparties who should be joined or might be subject to joinder and to update that information if need be as the case goes along. Violating the rule calls for dismissal only where failure to comply was “inexcusable” and the right of the undisclosed party to defend the later action has been “substantially prejudiced.”
The rule was not violated because Jiorle amended his certification in the Mupos case to add Maenza’s name shortly after he was deposed as a witness on Feb. 7, 2006, the panel said.
It rejected Maenza’s argument that Jiorle was too late because he knew the essential facts before the deposition. Further, it found no prejudice, even though the malpractice case exposed Maenza to possible legal fees that might have been avoided as part of the earlier case.
Maenza’s lawyer, Leon Piechta of Tompkins, McGuire, Wachenfeld & Barry in Newark, calls it unfair to hold off suing Maenza, then sue and seek fees for both trials. “I don’t think that’s what Saffer was meant for,” he says, referring to Saffer v. Willoughby, the case authorizing legal fees in attorney-malpractice suits.
Jiorle’s lawyer, Mount Laurel solo J. Llewellyn Mathews, notes that his client is not seeking a double recovery since he has not been able to collect from the Mupos. If he could have, “I might not have sued Philip Maenza,” he says.
Maenza did not return a call. ■